We expect to raise our steel fair value estimates.
By Andrew Lane | 11-09-16 | 11:00 AM | Email Article

U.S. steel stocks soared after the market opened on Nov. 9 after Donald Trump won the U.S. presidential election and the Republicans maintained control of the Senate and U.S. House of Representatives. Share prices for many steel stocks under our coverage rose more than 10% shortly after the market opened.

Andrew Lane is a senior equity analyst for Morningstar.

We are reassessing our forecasts for each company and expect to modestly raise our fair value estimates for U.S. steelmakers. However, our fair value adjustments will likely be of a lower magnitude than the post-election share price appreciation, as we surmise that investors have overreacted somewhat to the implications of a Trump presidency. Although our steel price forecasts are unchanged, we expect to modestly increase volume and margin forecasts as higher steel production volumes will lead to slightly lower unit costs via the benefits of operating leverage.

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